HHS Investigates Minnesota’s Management of Billions in Federal Social Service Funds Amid Fraud Allegations

Federal authorities have launched a comprehensive investigation into Minnesota’s use of billions of dollars in federal social service funding, raising concerns that taxpayer money might have been misused to support illegal immigration in the state.

The Department of Health and Human Services (HHS) sent formal inquiry letters on Monday to Minnesota Governor Tim Walz, Minneapolis Mayor Jacob Frey, and a nonprofit organization involved in administering Head Start programs. Alex Adams, assistant secretary for the Administration for Children and Families (ACF), is leading the investigation to determine whether federal safety-net funds were diverted or mismanaged.

“We have legitimate reason to think that they’ve been using taxpayer dollars incorrectly,” Adams told the New York Post, which first reported on the investigation. The review is focused on “accountability for American taxpayers” and ensuring the integrity of federal benefit programs.

According to federal spending records, Minnesota received more than $8.6 billion in ACF funding between fiscal years 2019 and 2025, distributed through more than 1,000 federal grants. In fiscal year 2025 alone, the state received over $690 million for various safety-net programs.

The inquiry comes amid growing concerns about Minnesota’s financial oversight. The letters referenced public statements from hundreds of Department of Human Services employees who allegedly warned about fraud only to be disregarded, with whistleblowers reportedly facing retaliation.

“The Trump Administration has made clear its commitment to rooting out fraud, protecting taxpayer dollars, and ensuring program integrity across all federal benefit programs,” Adams wrote in the letters.

The investigation is particularly focused on whether mismanaged funds might have “been used to fuel illegal and mass migration” into Minnesota. This concern aligns with data from the Pew Research Center showing Minnesota’s unauthorized migrant population increased by approximately 40,000 people between 2019 and 2023, reaching an estimated 130,000 residents—about 2% of the state’s total population.

HHS has requested comprehensive information from Minnesota officials, including a detailed list of all state entities that received ACF funding during the review period. The request extends to specific administrative data including recipient names, addresses, dates of birth, and where applicable, Social Security numbers and immigration identification numbers.

The federal review encompasses several major programs, including the Community Services Block Grant, Social Services Block Grant, Low-Income Home Energy Assistance Program, Title IV-E Foster Care, Refugee Cash and Medical Assistance, the Child Care and Development Fund, and Parents in Community Action, a Head Start grantee.

This investigation follows multiple high-profile fraud cases in Minnesota, most notably the Feeding Our Future scheme, in which federal prosecutors charged dozens of individuals in connection with the misappropriation of more than $250 million intended for child nutrition programs. Many of those charged had connections to nonprofits serving Minnesota’s Somali community. The funds were allegedly diverted for luxury purchases and real estate instead of feeding children as intended.

The scrutiny of Minnesota’s handling of federal funds represents a significant challenge for Governor Walz, who has previously described Minnesota as “a prosperous state, a well-run state.” Neither Governor Walz nor Mayor Frey has issued a formal response to the inquiry at this time.

The investigation also signals the broader priorities of the current administration in addressing fraud in federal assistance programs and scrutinizing how states manage immigration-related resources. As federal agencies continue to examine the allocation of social service funding, the results could have implications for program administration nationwide and influence future funding decisions for states with significant immigrant populations.

Authorities have not announced a timeline for when the investigation might conclude or what potential penalties Minnesota could face if misuse of federal funds is confirmed.